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 The	
  Future	
  of	
  Payments	
  	
  
	
  Insights	
  from	
  Discussions	
  Building	
  on	
  an	
  Ini4al	
  Perspec4...
Context	
  
The	
  ini4al	
  perspec4ve	
  on	
  the	
  Future	
  of	
  Payments	
  kicked	
  off	
  the	
  	
  
Future	
  ...
Big	
  Data	
  Opportuni9es	
  
	
  Most	
  of	
  the	
  opportuni4es	
  big	
  data	
  can	
  offer	
  have	
  yet	
  to	
...
Bricks	
  and	
  Clicks	
  
	
  Is	
  omnichannel	
  just	
  a	
  buzz	
  word?	
  How	
  important	
  is	
  the	
  consis...
The	
  End	
  of	
  Cash?	
  
	
  All	
  the	
  evidence	
  suggests	
  that	
  the	
  use	
  of	
  cash	
  is	
  in	
  de...
Enabling	
  Financial	
  Inclusion	
  
	
  With	
  many	
  organisa4ons	
  now	
  making	
  financial	
  inclusion	
  a	
  ...
Personalised	
  Shopping	
  
	
  In	
  ten	
  years	
  you	
  can	
  expect	
  to	
  walk	
  past	
  a	
  shop	
  and	
  y...
Omnichannel	
  Access	
  
	
  You	
  may	
  be	
  able	
  to	
  order	
  online	
  and	
  pick	
  up	
  at	
  the	
  store...
Growth	
  of	
  Mobile	
  Point	
  of	
  Sale	
  
	
  In	
  the	
  next	
  ten	
  years	
  there	
  will	
  be	
  a	
  glo...
Mul9-­‐factor	
  Authen9ca9on	
  	
  
Mul4-­‐factor	
  authen4ca4on	
  will	
  become	
  the	
  norm...	
  authen4ca4on	
 ...
Cross-­‐Border	
  Commerce	
  
	
  Cross-­‐border	
  commerce	
  is	
  growing	
  faster	
  than	
  domes4c	
  commerce	
 ...
Low	
  Value	
  Payments	
  	
  
One	
  area	
  that	
  is	
  likely	
  to	
  see	
  significant	
  transforma4on	
  is	
  ...
MiData	
  
In	
  the	
  future,	
  customers	
  will	
  retain	
  full	
  ownership	
  of	
  their	
  own	
  consumer	
  d...
Unbundling	
  of	
  Payments	
  Value	
  Chain	
  
Greater	
  compe44on,	
  new	
  innova4ons	
  and	
  changing	
  regula...
Changing	
  Customer	
  Expecta9ons	
  
Customers	
  will	
  expect	
  different	
  things	
  from	
  their	
  payments	
  ...
Prolifera9on	
  of	
  Currencies	
  
People	
  will	
  increasingly	
  use	
  mul4ple	
  forms	
  of	
  currency	
  in	
  ...
Regula9on	
  of	
  Services	
  
A	
  new	
  regula4on	
  model	
  will	
  emerge	
  in	
  the	
  payments	
  world.	
  Whe...
Transac9onal	
  vs.	
  Emo9onal	
  	
  
Seamless	
  payments	
  will	
  distance	
  consumers	
  from	
  understanding	
  ...
Seamless	
  Ubiquitous	
  Payments	
  	
  
The	
  ability	
  to	
  ‘transact	
  anywhere’	
  with	
  integrated,	
  sophis...
Integrated	
  Global	
  Governance	
  	
  
Regula4on	
  to	
  support	
  global,	
  regional	
  and	
  local	
  transac4on...
Evolu9on	
  of	
  Security	
  	
  
The	
  need	
  for	
  physical	
  security	
  reduces	
  with	
  demise	
  of	
  the	
 ...
Reduced	
  Human	
  Control	
  	
  
We	
  see	
  a	
  world	
  where	
  most	
  connected	
  devices	
  can	
  be	
  used	...
Device	
  is	
  King,	
  Consumer	
  is	
  Queen	
  
Whether	
  on	
  devices	
  or	
  in	
  the	
  cloud,	
  our	
  digit...
Tension	
  with	
  Regula9on	
  	
  
Some	
  regional	
  regulatory	
  interven4ons	
  protect	
  consumers	
  whilst	
  o...
The	
  Composite	
  Consumer	
  
Flexible	
  digital	
  iden44es	
  allow	
  consumers	
  to	
  connect	
  with	
  each	
 ...
A	
  Systema9c	
  View	
  
Policy	
  makers	
  from	
  around	
  the	
  world	
  will	
  have	
  to	
  look	
  at	
  the	
...
Data	
  Darwinism	
  	
  
Data	
  is	
  a	
  new	
  form	
  of	
  power:	
  Corporate	
  consolida4on	
  places	
  data	
 ...
Seamless	
  Data	
  Representa9on	
  	
  
Improvements	
  in	
  the	
  way	
  in	
  which	
  data	
  is	
  visualized	
  a...
Trust	
  and	
  Integrity	
  of	
  the	
  System	
  
As	
  more	
  individual	
  control	
  and	
  simplicity	
  is	
  sou...
Free	
  Banking	
  from	
  Non-­‐tradi9onal	
  Players	
  	
  	
  
Innova4ve	
  business	
  models	
  -­‐	
  underpinned	
...
Compe9tor	
  Collabora9on	
  
Wider	
  collabora4ons	
  change	
  the	
  payments	
  landscape	
  with	
  credit	
  card	
...
Digital	
  Regulatory	
  Regions	
  	
  
With	
  learnings	
  from	
  successes	
  in	
  East	
  Africa,	
  autonomous/sov...
Mobile	
  Currency	
  Convergence	
  
Ambi4ons	
  for	
  convergence	
  of	
  payment	
  types	
  is	
  accelerated	
  by	...
Financial	
  Inclusion	
  Driven	
  by	
  Payments	
  Companies	
  
Improvements	
  in	
  financial	
  educa4on	
  for	
  t...
Future	
  Agenda	
  
84	
  Brook	
  Street	
  
London	
  
W1K	
  5EH	
  
+44	
  203	
  0088	
  141	
  
futureagenda.org	
 ...
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Future of payments - Insights from Discussions Building on an initial perspective on how payments are helping to shape the future of commerce

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The initial perspective on the Future of Loyalty by MasterCard kicked off the Future Agenda 2.0 global discussions taking place through 2015. This summary builds on the initial view and is updated as we progress the futureagenda2.0 programme. www.futureagenda.org

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Future of payments - Insights from Discussions Building on an initial perspective on how payments are helping to shape the future of commerce

  1. 1.  The  Future  of  Payments      Insights  from  Discussions  Building  on  an  Ini4al  Perspec4ve  by:    MasterCard  on  How  Payments  are  Helping  to  Shape  the  Future  of  Commerce  
  2. 2. Context   The  ini4al  perspec4ve  on  the  Future  of  Payments  kicked  off  the     Future  Agenda  2.0  global  discussions  taking  place  through  2015.     This  summary  builds  on  the  ini4al  view  and  is  updated  as  we  progress.   Ini4al   Perspec4ves   Q4  2014   Global   Discussions   Q1/2  2015   Insight   Synthesis   Q3  2015   Sharing     Output   Q4  2015  
  3. 3. Big  Data  Opportuni9es    Most  of  the  opportuni4es  big  data  can  offer  have  yet  to  be  fully     exploited.  The  reality  is  that  there  are  different  chunks  of  data    that  are  collected,  stored  and  managed  in  mul4ple  ways.  
  4. 4. Bricks  and  Clicks    Is  omnichannel  just  a  buzz  word?  How  important  is  the  consistent     shopping  experience  across  channels?  What  is  the  future  of  physical  stores?     Can  bricks  keep  pace  with  clicks  or  is  it  in  fact  the  other  way  around?  
  5. 5. The  End  of  Cash?    All  the  evidence  suggests  that  the  use  of  cash  is  in  decline  across  the     globe.  Cash  takes  4me  to  get  at,  is  riskier  to  carry,  and  by     most  es4mates,  cash  costs  society  as  much  as  1.5%  of  GDP.  
  6. 6. Enabling  Financial  Inclusion    With  many  organisa4ons  now  making  financial  inclusion  a  priority,  it  is    likely  we  will  see  a  significant  por4on  of  the  2.5bn  unbanked     adults  armed  with  electronic  payments  products  in  the  future.  
  7. 7. Personalised  Shopping    In  ten  years  you  can  expect  to  walk  past  a  shop  and  your  mobile  will     receive  meaningful  and  personal  no4fica4ons  on  discounts  or  deals     in  store  that  you  are  likely  to  buy  based  on  your  shopping  preferences.    
  8. 8. Omnichannel  Access    You  may  be  able  to  order  online  and  pick  up  at  the  store,     order  at  store  and  arrange  delivery  online,  get  similar  offers     across  channels  and  yet  have  the  same  payment  op4ons.    
  9. 9. Growth  of  Mobile  Point  of  Sale    In  the  next  ten  years  there  will  be  a  global  acceptance  of  electronic     payment  products.  We  are  nearly  there  with  Square  and  iZele.  Such  is     their  success  it  is  expected  that  by  2019  46%  of  POS  terminals  will  be  mPOS.  
  10. 10. Mul9-­‐factor  Authen9ca9on     Mul4-­‐factor  authen4ca4on  will  become  the  norm...  authen4ca4on  itself  will   become  more  secure  as  biometric  technology  from  hand  geometry,  via  face   recogni4on  and  fingerprints  to  iris  recogni4on  become  more  mainstream.  
  11. 11. Cross-­‐Border  Commerce    Cross-­‐border  commerce  is  growing  faster  than  domes4c  commerce  and  so  will   become  increasingly  important  and  influen4al.  Cross-­‐border  flow  of  goods,   services  and  finance  could  increase  threefold  to  $85  trillion  by  2025.  
  12. 12. Low  Value  Payments     One  area  that  is  likely  to  see  significant  transforma4on  is  low  value  payments  -­‐   everyday,  high-­‐frequency  purchases  for  which  cash  is  used  (typically  sub  $10   transac4ons)  and  make-­‐up  the  bulk  of  cash  transac4ons  today.  
  13. 13. MiData   In  the  future,  customers  will  retain  full  ownership  of  their  own  consumer  data   in  machine-­‐readable  format,  which  they  then  opt  to  share  with  merchants.   Some  customers  will  hire  ‘personal  data  managers’  to  make  this  easy  
  14. 14. Unbundling  of  Payments  Value  Chain   Greater  compe44on,  new  innova4ons  and  changing  regula4ons  will     mean  that  the  current  value  chain  will  spread  out,  removing  steps  and     so  reducing  costs  for  both  consumers  and  suppliers.  
  15. 15. Changing  Customer  Expecta9ons   Customers  will  expect  different  things  from  their  payments  experience:    instead  of  just  ‘security’,  there  will  also  be  a  need  for  greater  individual     control,  flexibility,  choice,  efficiency,  convenience  and  “good  fric4on”.  
  16. 16. Prolifera9on  of  Currencies   People  will  increasingly  use  mul4ple  forms  of  currency  in  different     contexts:  alongside  na4onal  legal  tender,  we  will  see  more  local     and  crypto-­‐currencies  –  many  decoupled  from  exis4ng  systems.  
  17. 17. Regula9on  of  Services   A  new  regula4on  model  will  emerge  in  the  payments  world.  Whereas    to  date  regulators  have  focused  on  “defini4ons  of  en44es”  their  role  will     shik  to  being  more  about  “regula4on  of  services”  and  wider  alignment.  
  18. 18. Transac9onal  vs.  Emo9onal     Seamless  payments  will  distance  consumers  from  understanding     monetary  value.  Brands  will  have  to  reconsider  the  way  they  connect     to  customers  providing  more  holis4c  and  emo4onal  value.  
  19. 19. Seamless  Ubiquitous  Payments     The  ability  to  ‘transact  anywhere’  with  integrated,  sophis4cated     authen4ca4on  such  as  biometrics  increases:  More  contactless  technology    and  a  convergence  of  standards,  enable  global  informa4on  exchanges.  
  20. 20. Integrated  Global  Governance     Regula4on  to  support  global,  regional  and  local  transac4ons  will  increase.    A  set  of  global  integrated  standards  and  governance  for  payments     will  emerge  to  which  key  regulators  and  merchants  all  sign  up  to.  
  21. 21. Evolu9on  of  Security     The  need  for  physical  security  reduces  with  demise  of  the  use  of  cash.  In  its   place,  more  secure  digital  solu4on  plamorms  pervade  with  a  consolida4on  of   iden4ty  and  payments  into  an  ecosystem  that  includes  crypto-­‐currencies.  
  22. 22. Reduced  Human  Control     We  see  a  world  where  most  connected  devices  can  be  used    for  payments,  more  people  will  be  financially  included  and  there     are  more  automated  payment  choices  and  channels.    
  23. 23. Device  is  King,  Consumer  is  Queen   Whether  on  devices  or  in  the  cloud,  our  digital  repositories  will  know  who  we   are,  where  we  are  and  what  we  redeem.  Businesses  need  to  understand  these   new  intermediaries  and  how  they  define  our  rela4onships  with  their  brands.  
  24. 24. Tension  with  Regula9on     Some  regional  regulatory  interven4ons  protect  consumers  whilst  others   prevent  innova4on  by  limi4ng  use  of  new  technologies.  A  power  struggle   between  brands  and  government  emerges  around  wider  data  sharing  and  use.  
  25. 25. The  Composite  Consumer   Flexible  digital  iden44es  allow  consumers  to  connect  with  each  other  even     as  they  connect  with  brands.  Loyal  rela4onships  will  be  made  not  just  with   individual  customers  but  also  with  families,  couples,  and  groups  of  friends.  
  26. 26. A  Systema9c  View   Policy  makers  from  around  the  world  will  have  to  look  at  the  problems     of  wealth  crea4on  and  wealth  inequality  in  a  more  systemic  way,     with  the  use,  for  example,  of  a  complexity  framework.  
  27. 27. Data  Darwinism     Data  is  a  new  form  of  power:  Corporate  consolida4on  places  data  in  the     hands  of  a  few  who  are  able  to  dictate  terms  above  others.  Governments   correspondingly  have  less  power  as  they  have  less  access  to  key  data.  
  28. 28. Seamless  Data  Representa9on     Improvements  in  the  way  in  which  data  is  visualized  and  presented  leads  to   rising  consump4on  and  wider  use.  In  turn,  we  see  greater  efficiencies  and   benefits  for  individuals,  companies,  governments  and  society  as  a  whole.    
  29. 29. Trust  and  Integrity  of  the  System   As  more  individual  control  and  simplicity  is  sought,  how  will  the  privacy   con4nuum  evolve,  will  tokenisa4on  diminish  security  concerns     and  do  we  know  what  trust  will  mean  in  the  future?  
  30. 30. Free  Banking  from  Non-­‐tradi9onal  Players       Innova4ve  business  models  -­‐  underpinned  by  changing  technology,  consumer   demand  and  Governments  pushing  for  cheaper  or  free  banking  -­‐  open  the   doors  to  new  entrants  from  outside  the  sector  that  break  old  monopolies.  
  31. 31. Compe9tor  Collabora9on   Wider  collabora4ons  change  the  payments  landscape  with  credit  card   companies  partnering  with  merchants,  MNOs,  and  new  entrants.  These   partnerships  share  infrastructure,  increasing  consumer  u4lity  and  choice.  
  32. 32. Digital  Regulatory  Regions     With  learnings  from  successes  in  East  Africa,  autonomous/sovereign  regulatory   authori4es  come  together  to  create  con4guous  digital  regulatory  regions  that   span  geographic  borders  and  boundaries  and  lead  to  payments  convergence.  
  33. 33. Mobile  Currency  Convergence   Ambi4ons  for  convergence  of  payment  types  is  accelerated  by  the  crea4on     of  seamless  mobile  consumer  experiences  that  unite  mul4ple  cash-­‐less  stores   of  value  including  a  range  of  tradi4onal  and  alterna4ve  currencies.  
  34. 34. Financial  Inclusion  Driven  by  Payments  Companies   Improvements  in  financial  educa4on  for  the  mass  are  driven  by  the  payments   industry,  not  governments.  Predica4ve  algorithms  protect  consumers  by   reducing  their  ability  to  over-­‐extend  themselves  with  cheap  credit.  
  35. 35. Future  Agenda   84  Brook  Street   London   W1K  5EH   +44  203  0088  141   futureagenda.org   The  world’s  leading  open  foresight  program   What  do  you  think?   Join  In  |  Add  your  views  into  the  mix     www.futureagenda.org  

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